What Is Dash?

Dash is a decentralized, peer-to-peer (P2P) payment protocol and cryptocurrency, whose transactions are recorded on the blockchain. Users can instantly send and receive secure digital payments with minimal fees using DASH. DASH is the network's native cryptocurrency, and provides users with a portable, divisible and fast option for making cross-border transactions. In this article, we’ll look at what is DASH and how it works.

Dash aims to become the most scalable and user-friendly global payments system, improving on the Bitcoin network and cryptocurrency by offering instant and private transactions, with a self-governing and self-funding model. Users — individuals and businesses — that add value to the network are rewarded for their work with DASH. The name 'Dash' is a play on the network's goal of becoming 'digital cash'.

What Is Dash: Quick Facts

• Dash is a decentralized, P2P payments protocol and cryptocurrency, which can be used for making international transactions quickly and affordably.
• Dash was launched by software developer Evan Duffield in January 2014, originally under the name XCoin, which was later changed to Darkcoin, and then to Dash in 2015.
• Dash uses a traditional proof-of-work (PoW) consensus mechanism for mining new blocks.
• Dash also uses masternodes - nodes with high availability that users are incentivised to operate — in a two-tier system.

How Dash Works

Dash's founders noticed several flaws with Bitcoin:

• The time required for the network to confirm transactions
• Vendors using third-party to mediate transactions, in order to speed up transaction times
• Lack of privacy

DASH is the first cryptocurrency created with built-in privacy functions, based on the work of Satoshi Nakamoto — Bitcoin's illusive founder. DASH was designed to be a decentralized, tamper-proof and anonymous cryptocurrency, with instant transactions and secondary peer-to-peer network. It's clear why the network was created, but what is Dash and how does it work?

Blockchains function using nodes — computers that run software to validate blockchain transactions. These nodes can incur substantial cost on P2P networks, which is why Bitcoin has seen a steady decrease in the number of nodes being operated on its network. Lower node counts lead to increased transaction times, which is one of Bitcoin's greatest criticisms.

Dash utilizes a secondary network: the Dash masternode network. The nodes on this network have high availability and users are incentivized to run nodes because of the Masternode Reward Program. Masternodes are full nodes that must provide a level of service to the network and have a bond of collateral — 1000 DASH — to participate. 45% of all block rewards are dedicated to the Masternode Reward Program, and when active, masternodes receive regular payment in the form of DASH. The remaining block rewards are split between miners (45%) and the treasury (10%).

Instant Send

Traditionally, decentralized cryptocurrencies must wait at least 15 minutes for enough blocks to pass to ensure that a transaction is irreversible. Other cryptocurrencies surpass this issue by centralizing the authority of the network. Dash improves on these issues by having masternodes 'lock' the input for transactions, broadcasting the decision that the transaction will be included in subsequently mined blocks. This means that transactions can be confirmed within two seconds, because the network does not require a certain number of blocks to pass before approving the transaction.

CoinJoin

CoinJoin provides users with financial privacy by shuffling their DASH with that of other users. DASH consists of different inputs — effectively separate coins — which are joined with the inputs of at least two other users within a single transaction. This makes it incredibly difficult for a third-party to trace somebody's transaction history, increasing security, decentralization and anonymity.

ChainLocks

ChainLocks are a feature that can be used in parallel with InstantSend to create an environment in which payments can be accepted immediately and without need for multiple transaction confirmations'. Every twelve hours, a new Long-Living Masternode Quorum is formed. The nodes in this LLMQ are responsible for observing and affirming newly mined blocks.

When a block is mined, the Quorum Members will broadcast a signed message to the rest of the Quorum — if 60% of the Quorum sees the same new block, theft will create a ChainLock Signature, which will be broadcast to the remainder of the network. When a ChainLock Signature is received by a client, it will reject all blocks that don't match the one specified in the original message. This system ensures a quick and concise decision, allowing for much quicker transactions than can be found on networks in which this system doesn't exist.

Where Is Dash Used?

Since the company was founded in 2014, Dash has experienced a rapid growth in popularity. As a result, it's now possible to spend DASH at a range of global locations.

The Dash website suggests that you can "Spend your [Dash] at thousands of retailers and services. Shop online in the US, or at a local grocery in Venezuela. Feast on chicken in Caracas, or enjoy a relaxed coffee in New Hampshire. Top up your phone, or browse the internet with maximum security."

Here are a few of the industries and businesses at which it's possible to spend DASH:

Dash Founders/History

Dash was created by Evan Duffield, a well-known American software developer. Duffield is responsible for the creation of the X11 mining algorithm utilized by the Dash network, as well as the network itself.

Duffield created XCoin in January 2014, with the aim of improving on the performance of Bitcoin. He also chose to make many of XCoin's fundamental features public, including the hashing algorithm, X11.

An initial bug in the code of XCoin enabled two million coins to be mined in only a few days, although this issue was quickly rectified by the coin's creator. After discovering this bug, Duffield made the decision to change the project's name from XCoin to DarkCoin, although the community did not take to the negative connotations of the new name. Eventually, the project's name was changed to Digital Cash, or Dash.

After getting the project firmly up and running, Duffield decided to step down from his role as CEO at Dash Core, instead focusing on Dash Labs in a much less public role.

Dash Tokenomics

As stated previously, DASH is the native token of the Dash platform. It has a maximum supply of 18.92 million tokens, all of which should have been mined by the year 2477. Because of the network's coin emission, the last DASH coin will take 231 years to generate.

In order to restrict the inflation of mining, there is a 7% reduction of the DASH supply every year, making the cryptocurrency deflationary in nature. Additionally, the amount of DASH that can be mined is directly tied to the amount of miners on the network — the more miners, the lower the mining rewards.

How Is Dash Created/Mined

Dash is created using a cryptographically difficult process known as mining, which involves solving hash algorithms until a valid solution is found. But what is Dash's hashing mechanism and how does it differ to other blockchains?

Dash uses the X11 hash algorithm created by the network's creator, Evan Duffield. The X11 algorithm utilizes a sequence of eleven scientific hashing algorithms, increasing the blockchain's security and removing any uncertainty. X11 improves on previous hashing methods by making it more complex; this is done by increasing the number of hashes. 

Bitcoin's proof-of-work network is known as an SPOF (Single Point Of Failure). If Bitcoin's hash was 'broken', the entire network would be put in jeopardy. For the Dash network, all eleven hashes would need to be 'broken' simultaneously for any issues to arise. Due to the improbability of this occurring, the Dash network and its PoW mechanism are incredibly secure.

Dash Competition and How It Fares

Due to the nature of Dash and what it aims to achieve, the network faces some stiff competition within the Web3, DeFi space, as well as from more traditional payment platforms.

Monero (XMR)

Monero is a leading cryptocurrency and payments platform that focuses on private and censorship-resistant transactions. It prides itself on offering confidential and untraceable transactions, and each of its users are completely anonymous and their payments untraceable by default. Monero is "electronic cash" that can be used to make fast and incredibly affordable payments globally.

Both network's are incredibly secure and can transact quickly, but Monero is arguably far more decentralized due to its anonymity, which some suggest gives it an edge over Dash.

Bitcoin Cash

Bitcoin Cash was created from a fork of Bitcoin, and shares many technical similarities with its predecessor. Much like Dash, Bitcoin Cash looked to improve on Bitcoin's lengthy transaction time and relatively expensive fees. Bitcoin Cash is a fast and reliable network that can be used to send money around the world with impressively low fees. The Bitcoin Cash site suggests that it is "fulfilling the original promise of Bitcoin as 'Peer-to-Peer Electronic Cash".

Bitcoin Cash struggles with lower adoption rates than Bitcoin, for obvious reasons, and it's often remarked that Bitcoin Cash's similar branding is problematic. That being said, it is an efficient, scalable and affordable alternative to many cryptocurrencies, but Dash is in a comparatively better position from which to succeed.

Dash Partnerships and Investors

Dash has partnered with an incredibly varied range of businesses and retailers, and as a result, the adoption of the network has increased dramatically within recent years. In a partnership announced in November 2021, Valkyrie Investments Inc. — an asset management firm choosing to invest in the digital asset economy — began offering Dash staking through its Valkyrie Dash Trust (VDASH).

Valkyrie's Chief Investment Officer Steven McClurg commented on the partnership, saying that he wanted to release products for "under-the-radar altcoins where developers are building better technologies and decentralized applications".

Individuals and institutions can stake DASH with VDASH and earn an estimated yield of 2.5% to 4%.

Dash Strengths, Weaknesses, Opportunities and Threats

Arguments can be made both for and against the future success of Dash, as well as for its native cryptocurrency. With that in mind, what is Dash's greatest strength, and does its positives outweigh any of its negatives?

Strengths

• Dash is a well-rounded network, offering fast and affordable global transactions to users.
• Dash utilizes PrivateSend, a feature that allows users to make completely secure and anonymous payments. Web3 users are incredibly interested in privacy, so this is a huge selling point.
• Rewards from block development are distributed between miners, masternodes and the Dash treasury, providing incentive for users to run nodes, while still enabling the network's developers to invest in the infrastructure of the ecosystem.

Weaknesses

• There are claims that the majority of Dash's masternodes are run by the protocol's development team, which would make the network much less decentralized than some alternatives.
• Dash faces significant competition as a transactional digital currency. Monero, Bitcoin Cash, Litecoin — as well as an increasing range of altcoins — all offer the ability to make transactions, and some of them are cheaper, faster and more decentralized.
• Despite the network's growing adoption, Dash still lacks a significant number of users, investors and merchants, especially compared to some of its more significant competitors. This could lead to the cryptocurrency being 'left behind' as Web3 continues to expand to a wider audience.

Opportunities

• If Dash continues to expand its partnerships with global merchants and businesses, there is potential that the network could see incredible adoption, positioning it at the forefront of the digital currency market. If a particularly notable partnership is announced, there is an opportunity for the DASH price to grow exponentially.

Threats

• Dash's biggest threat is arguably a lack of relevancy. It's uncertain whether the network will continue as a frontrunning digital currency, or if it will get replaced by stronger alternatives that have already experienced greater adoption.

Dash Roadmap

Dash has been following a very distinct roadmap for several years. Moving forward, the next major addition to the network is the creation and launch of Dash Platform. Dash Platform is a technology stack for building decentralized applications on the Dash network. Once this is fully launched in 2023, it will offer inter-blockchain communication, as well as fungible and non-fungible token (NFT) support.

Dash Updates, News and Highlights

Dash has recently released Dash Core v18.0, a mandatory upgrade for all masternodes, miners and users. It was released on August 15th 2022 and looks to improve performance optimization and increase network stability. The update also made some changes to Dash's governance system, reducing the proposal fee from 5 DASH to 1, following a vote undertaken by masternode operators. This makes it more affordable for the Dash community to have a say in the future of the network.

Additionally, a recent report by Coin Telegraph shows that over 20 investment funds hold DASH, with 40 more intending to add it in the near future. This is due, in large part, to the anticipation of the mainnet launch of Dash Platform, mentioned above. Experts have suggested that the DASH price could go up following the platform's launch, hence its inclusion in so many investment funds.

Dash Governance: Is Dash Really Decentralized?

It's been suggested that, despite its claims, Dash is not really a decentralized network. If true, this is a devastating blow for both Dash investors and the network in general — decentralization is one of the pillars of Web3 and cryptocurrency, so it's essential that Dash maintains its status as a decentralized entity. So, what is Dash's system of governance and is the network really decentralized?

Dash Governance

Dash operates using a network of masternode operators that are heavily invested in the future of the protocol, especially considering the 1000 DASH collateral requirement. Dash uses a masternode voting mechanism, with masternode operators voting on specific budgets and projects on which 10% of the block reward should be spent. This system of governance is completely transparent, and the budget can be used for anything that creates value within the Dash ecosystem.

The remaining 10% of the mining reward is distributed monthly by the masternode operators, after the results of the vote are tallied. This helped to create the first self-sustaining decentralized cryptocurrency platform, organized as a decentralized autonomous organization (DAO). DashCentral is the site used to facilitate discussion and vote on the Dash blockchain proposals.

Issues With the Governance of Dash

Questions have been raised about the low barrier to entry for running a masternode. Anybody is able to run a masternode and vote on proposals for the Dash network, as long as they have 1000 DASH that they're willing to use as collateral. Although the low cost of running a node is beneficial in many ways, it does mean that individuals with limited knowledge or interest in the network can still vote, which may not necessarily be in the best interest of the Dash ecosystem.

Additionally, it's widely believed that the Dash development team operates a majority percentage of masternodes on the network. If true, Dash developers would effectively be able to have a final say in any decisions made by the protocol's DAO. Considering one of Web3's primary purposes is decentralization, this is a worrying sign.

Where To Buy Dash

How To Store Dash

There are a number of potential hot and cold storage options for DASH. For individuals hoping to hold their DASH for long periods of time, hardware wallets are potentially the best option. These are more secure than software wallets, but aren't necessarily the best option for those looking to spend or use their cryptocurrency regularly.

• Dash Core Wallet - This is Dash's own, highly secure wallet. It is the most commonly used wallet for storing DASH and can be installed on a computer.
• Exodus - Exodus is a secure multi-currency wallet that is easy to navigate around and enables the instant completion of transactions.
• Ledger Nano S - The Ledger Nano S is one of the most popular hardware wallets currently available. It supports DASH, alongside a range of other cryptocurrencies, and will provide users with additional security compared to online alternatives.

How To Stake Dash

Dash prides itself on being an industry-leader when it comes to staking cryptocurrencies. To stake Dash, masternode operators need to offer at least 1000 DASH as collateral, in order to start earning block rewards.

Masternode operators receive 45% of the block reward, although as the number of active nodes is constantly changing, staking rewards on the Dash network vary, depending on the total amount of functioning masternodes.

FAQ About Dash

What Is Dash?

Dash is a decentralized P2P payments protocol that allows users to instantly send and receive secure digital payments. Dash was created based on some weaknesses within the Bitcoin network, and functions using a self-governing and self-funding model. The term 'Dash' reflects the network's goal of becoming "digital cash".

What Is Dash's Native Cryptocurrency?

Dash's native cryptocurrency is DASH. DASH was the first cryptocurrency created with built-in privacy functions, and was designed to be tamper-proof and anonymous. Users can make instant and incredibly affordable transactions using DASH.

Who Founded Dash?

Dash was founded by Evan Duffield in 2014, after he noticed several flaws surrounding the Bitcoin network. In addition to creating Dash, Duffield also came up with the idea for the X11 algorithm, a unique and secure way of mining DASH. Duffield originally named the project XCoin, before the name was changed to Darkcoin, and then eventually Dash.

Is Dash Decentralized?

Dash is decentralized, as masternode operators vote on proposals regarding the future of the network. That being said, questions have been raised about whether or not Dash is truly decentralized, as it's believed that the Dash developers own and operate over 50% of the Dash masternodes. If true, they would be able to vote on (and pass) any decisions without input from the remaining masternode operators.

Which Is Better: Bitcoin or Dash?

Although Bitcoin is the world's number one cryptocurrency and has been since its inception, Dash is potentially a stronger option for investors. Dash founder Evan Duffield noticed a number of issues with Bitcoin, namely slow transaction speeds and unacceptably high transaction fees. As a result, Dash was founded with the specific intention of rectifying these issues. Bitcoin will almost certainly always be worth more (per coin) than Dash, but fundamentally, Dash is probably the stronger network of the two.